ZIMBABWE’S chrome miners could be losing up to US$70 per tonne in potential chrome due to huge disparities between domestic and export pricing of the mineral as cartels cash in on the distortions, the Zimbabwe Miners Federation (ZMF) has said.
Predatory buying is rampant across the mineral-rich Great Dyke, leaving producers at the mercy of buying cartels who are taking advantage of infrastructure and marketing challenges besetting the economy, ZMF president Henrietta Rushwaya said at a MMCZ chrome stakeholders consultative meeting held in the capital yesterday.
Government revenue generation is greatly reduced as it is based on the buying price while lost revenue prevents chrome producers from investing in value addition, Ruswhaya said.
In order to promote both Zimbabwe’s mining production as well as beneficiation via smelters, the domestic base price should be calculated as per international standards, Rushwaya said.
Improving the marketing environment in the chrome sector is seen becoming imperative in the next three years as surface chrome becomes depleted. This will see operations requiring underground exploitation of below 20 meters in depth.
“The current low predatory domestic market prices offered leaves Zimbabwean chrome producer’s growth vulnerable; with the limited opportunity to grow primarily dependent on foreign direct investment at the expense of the indigenous investor or producer,” she said.
This comes after industry warned production of chrome could plummet to 2014 levels as international prices are seen falling until mid-2020.
This could see smelters shut down and the industry suffering.
However, MMCZ and the Ministry of Mines remain optimistic the country will achieve its targets.
MMCZ general manager Tongai Muzenda said the chrome industry exported 215 000 tonnes of chrome ore in the first five months of the year to May, racking in US$29,4 million, latest figures show.
This compares favourably with 2018’s annual production figure of 980 000t with a value of US$153,1 million.
Of the total exports, small scale producers accounted for 98 698t valued at US$9,3 million while other producers exported 116 695t valued at US$20,1 million Muzenda told the chrome stakeholders consultative meeting.
Product quality is apparently inferior on small scale producers given their average price is around US$94/t while other producers are averaging about US$172/t.
Zimbabwe accounts for 12 percent of the world’s chrome ore deposits; only second to South Africa, but the value if far greater than 12 percent. The chrome reserves have only been exploited to the extent of 5 percent.
The country plans to more than double chrome ore and high carbon ferrochrome production between now and 2022 to 3,1 kilo metric tonnes (kmt) and 950 metric tonnes (mt) respectively.